WASHINGTON (CBS.MW) - The U.S. economy is recovering nicely despite the "bumpy" patch it's going through right now, Treasury Secretary Paul O'Neill said Wednesday.
Citing low interest rates, low inflation, falling unemployment rates, and strong housing and auto sales, O'Neill said he hasn't "seen anything that discourages me" from his forecast of 3 to 3.5 percent growth this year.
O'Neill dismissed a wary communiqué from the Federal Open Market Committee on Tuesday that suggested significant downside risks to the economic recovery as "bureaucratic."
He termed movements in the stock market as mere "shadows on the wall" that don't matter as long as everyone in the nation works hard at creating more value with fewer resources.
"Over a reasonable period of time, I believe that financial markets reflect the real value created by the economy," he said.
The nation doesn't need any further fiscal stimulus, he said. The best thing for job growth would be passage of a terror insurance bill that would put a federal guarantee on catastrophic losses from a further terrorist attack.
Congress must also approve legislation to create the Homeland Security Department and pass pension protection legislation, he said.
During a wide-ranging news conference, O'Neill bristled at the suggestion that uncertainty about a war with Iraq and the possible costs of such a war were weighing on financial markets.
"Iraq is about freedom," he said. "Freedom doesn't have an acceptable price limit."
O'Neill promised that he'd deliver his ideas for fundamental tax reform to President Bush within the next eight weeks or so. He denied that the administration had backed off on new tax cuts for this session of Congress.
He said he has no plans to step down after the midterm elections. "I'm having a good time," he said.
Rex Nutting is Washington bureau chief of CBS.MarketWatch.com.